Comments on: A new definition of the nerd?http://andrewgelman.com/2017/12/02/new-definition-nerd/
Thu, 24 May 2018 19:13:43 +0000hourly1https://wordpress.org/?v=4.9.6By: Kaiserhttp://andrewgelman.com/2017/12/02/new-definition-nerd/#comment-633343
Sun, 24 Dec 2017 08:33:46 +0000http://andrewgelman.com/?p=35595#comment-633343Having experienced the case method at HBS and spent a few years in management consulting, I must disagree that the case method is intended to train students “to express confident opinions even in circumstances when they had no claim whatsoever to relevant expertise.” Students do become more confident in delivering their arguments but it does not have to come at the expense of substance. It’s a false claim that there is a trade-off between credible content and persuasive delivery.

There are many non-HBS-trained management consultants, not products of the case method, who are equally guilty of making fluent arguments with scant evidence. The problems taken on by McKinsey-type consultants are usually vague and strategic, for which little relevant data can be obtained. That creates the condition for hot air.

I have long held that the case method should be more widely used in teaching statistics, precisely because its Socratic-like questioning helps bring out the assumptions and uncertainties inherent in statistical problems.

]]>By: Mark Palkohttp://andrewgelman.com/2017/12/02/new-definition-nerd/#comment-620703
Thu, 07 Dec 2017 09:53:36 +0000http://andrewgelman.com/?p=35595#comment-620703First off, just to be clear, you referred to “the link,” but there are two links in the comment, one that gives the source of the list…

And a postscript that connects it to the education reform thread. If you are looking for the supporting articles you should go to the Barry Ritholtz page, which provides links to for each point.

As for the argument that the list is disingenuous and unfair. We should probably start with the three most egregious charges in the list, Enron, Allstate, and Railtrack, but even if we put those aside for the moment, how good does the company’s track record look? Let’s follow the links.

http://www.washingtonpost.com/wp-dyn/content/article/2008/02/22/AR2008022202283_2.html?sid=ST2008022202336
“Not as legendary or fateful a mistake as AT&T’s, however. In 1980, the company whose Bell Labs invented cellphones listened to McKinsey, the consulting company they’d hired. Its estimate of the market in the year 2000 was off by a factor of 120 — not even 1 percent of the real number. Based on that, AT&T decided there wasn’t much future to these toys. Not coincidentally, in 2005, it was swallowed up by SBC Communications Inc., originally a Baby Bell.”

Even allowing for the qualifier “a big one,” defending the company’s record of technological forecasting (with no specific examples) definitely puts you in “other than that how did you like the play, Mrs. Lincoln?” territory, and the “nobody knew” defense doesn’t really hold either. A large segment of the telecommunication industry was betting heavily on mobile phones at the time:

https://en.wikipedia.org/wiki/Mobile_phone
“The first commercial automated cellular network was launched in Japan by Nippon Telegraph and Telephone in 1979. This was followed in 1981 by the simultaneous launch of the Nordic Mobile Telephone (NMT) system in Denmark, Finland, Norway, and Sweden. Several other countries then followed in the early to mid-1980s.”

Knowing what we know now, the GE analysis also looks highly questionable.

http://www.theledger.com/news/20101205/ge-goes-with-what-it-knows-making-stuff/3
“Sixty days later, the consulting team, he says, told G.E. that money from nations with a trade surplus, like China, and sovereign wealth funds, among other investors, would provide enough liquidity in the financial system to fuel lending and leverage for the foreseeable future. (McKinsey declined to comment on the study.)”

As do the recommendations to Swissair:

https://www.bloomberg.com/news/articles/2002-07-07/inside-mckinsey
“The bad news, however, is that Enron, which was paying McKinsey as much as $10 million in annual fees, is just one of an unusual number of embarrassing client failures for the elite consulting firm. Besides Enron, there’s Swiss-air, Kmart, and Global Crossing–all McKinsey clients that have filed for bankruptcy in relatively short order. And those are just the biggest. McKinsey also finds itself improbably lining up with other creditors to collect unpaid fees from recently bankrupt companies that soared during the late ’90s only to crash later. Battery maker Exide Technologies and NorthPoint Communications Group Inc., an upstart telecom provider, are two such examples.

…

“At Swissair Group, McKinsey advised a major shift in strategy that led the once highly regarded airline to spend nearly $2 billion buying stakes in many small and troubled European airlines. The idea was for Swissair to expand into aviation services, providing everything from maintenance to food for other airlines as a way to increase revenues and profits. The strategy backfired, causing massive losses and a bankruptcy filing last October. McKinsey maintains it can’t be held responsible for the outcome because it wasn’t involved in the implementation of the strategy.”

Decision Theoretic discussion starts at about 1:33. At approx. 1:37 he talks about how ideologies become institutionalized and how that affects the prospects of workers, managers and prospective consultants.

In many cases, consciously or not, clients are spending money to hire an “expert” to amplify a point of view that they lack the clout or credibility to advance. The last thing they want is some show-off with the ability to hold two opposed ideas in mind at the same time.

]]>By: Allanhttp://andrewgelman.com/2017/12/02/new-definition-nerd/#comment-619277
Tue, 05 Dec 2017 04:18:52 +0000http://andrewgelman.com/?p=35595#comment-619277I’m not sure it’s a desire for positive thinking so much as it is for salability. In my experience clients usually expect certainty from the experts their paying; when you show signs of being uncertain they sometimes (more often then not) take that to mean deficient knowledge and move their business to the next person who will sell them certainty.

]]>By: Allanhttp://andrewgelman.com/2017/12/02/new-definition-nerd/#comment-619272
Tue, 05 Dec 2017 04:10:47 +0000http://andrewgelman.com/?p=35595#comment-619272I have no particular affinity for McKinsey or any other consulting firm. But this list is downright disingenuous and could be easily written to have a much more positive light given the information provided in the link.

For example (statements in brackets are a fictitious, but plausible addition to the statement of facts provided),

“General Electric lost over $1 billion after following McKinsey’s advice in 2007 — just before the financial crisis hit.” [However, it has been estimated that GE would have lost $xx billion (>>$1 billion) if they had followed their previous path and did not follow McKinsey’s advice going into the crisis.]

“Advising AT&T (Bell Labs invented cellphones) that there wasn’t much future to mobile phones” [However, they did so at a time when almost no one in the industry believed that the cell phone would ever be a popular item; and despite this one miss, albeit a big one, McKinsey’s track record of forecasting technological changes remains one of the best in the industry.]

“Swissair went into bankruptcy after implementing a McKinsey strategy” [However, Swissair had very little hope of ever escaping bankruptcy given the obligations of the company prior to Swissair engaging McKinsey. It looks like the McKinsey strategy has given the company a good shot at restructuring the business post-bankruptcy protection]

…Without relevant background information, which does not appear to be provided in the link you posted, each bullet item in the list could be made to show McKinsey in a different light…Not saying that’s likely, but I don’t think the original Author of the bullet point list is in a position to make that call (neither you nor I).

BTW, the first point about GE is not at all substantiated by the article that your link references…in the actual article it says that GE lost 1 billion on the sale of WMC Mortage in 2007 after purchasing it in 2004….McKinsey was only involved to the extent that they were asked to comment on the risk of GE Capital heading into the crisis according to the article. I haven’t read the others in any detail; I stopped after the first article was completely misrepresented in the bullet point list.

]]>By: Allanhttp://andrewgelman.com/2017/12/02/new-definition-nerd/#comment-619263
Tue, 05 Dec 2017 03:46:57 +0000http://andrewgelman.com/?p=35595#comment-619263Why do you suggest that the case study structure is like power posing?
]]>By: Martha (Smith)http://andrewgelman.com/2017/12/02/new-definition-nerd/#comment-619100
Mon, 04 Dec 2017 16:58:36 +0000http://andrewgelman.com/?p=35595#comment-619100Thanks for the bad news (I don’t mean that sarcastically).
]]>By: jdhttp://andrewgelman.com/2017/12/02/new-definition-nerd/#comment-619071
Mon, 04 Dec 2017 15:16:22 +0000http://andrewgelman.com/?p=35595#comment-619071I can speak to the consulting bit since that’s my field–If consulting services and ‘business intelligence’ were ever actually peer-reviewed, then they would probably also be in a replication crisis right now, but who’s going to pay for the same analysis to be done twice with the risk of undermining the first ‘deliverable’? It’s basically the same incentive structure as academia: analysts have to churn out statistically significant results–and you usually get bonus points in presentations if your results are surprising or previously unknown (read: false positive).
]]>By: Martha (Smith)http://andrewgelman.com/2017/12/02/new-definition-nerd/#comment-618761
Sun, 03 Dec 2017 21:13:31 +0000http://andrewgelman.com/?p=35595#comment-618761“They wanted the case-study structure to stay, because it trained students to have and express confident opinions even in circumstances when they had no claim whatsoever to relevant expertise.”

Aargh! Just what the world needs less of! (Kinda like power posing.)

]]>By: Martha (Smith)http://andrewgelman.com/2017/12/02/new-definition-nerd/#comment-618757
Sun, 03 Dec 2017 21:09:30 +0000http://andrewgelman.com/?p=35595#comment-618757“My other sense was that any indication of an ability to grasp the real uncertainties was perceived as negative”

Sadly, all to often true; a preference for “positive thinking” over reality.

]]>By: Sean Matthewshttp://andrewgelman.com/2017/12/02/new-definition-nerd/#comment-618746
Sun, 03 Dec 2017 20:03:34 +0000http://andrewgelman.com/?p=35595#comment-618746I should say that I work for a consultancy and have done so for my entire post-research career. Long before I did so, I remember reading a book on managing consulting (alas I no-longer remember what it was), which recounted that once upon a time Harvard Business School seriously considered restructuring their MBA ciriculum to be much less case study-centric. McKinsey lobbied hard and effectively against this change. They wanted the case-study structure to stay, because it trained students to have and express confident opinions even in circumstances when they had no claim whatsoever to relevant expertise.

To this day, this is first thing I think of when I think of McKinsey (or Harvard Business School).

If anyone has a reference for this anecdote, I would appreciate it.

]]>By: Keith O'Rourkehttp://andrewgelman.com/2017/12/02/new-definition-nerd/#comment-618676
Sun, 03 Dec 2017 16:12:37 +0000http://andrewgelman.com/?p=35595#comment-618676After completing MBA school I did a number of internship like projects and was interviewed by a few of “McKinsey want to be” consulting firms. My sense was that they were looking for employees that could credibly create a sense of being sure about stuff no one could be sure about.

My other sense was that any indication of an ability to grasp the real uncertainties was perceived as negative and on on my part likely lead to our parting of ways. They had some people who did understand but only in senior management positions.

‘In a job inter­view with McKinsey, they told him that he was not certain enough in his opinions. “And I said it was because I wasn’t certain. And they said, ‘We’re billing clients five hundred grand a year, so you have to be sure of what you are saying.’”’

• Swissair went into bankruptcy after implementing a McKinsey strategy (BusinessWeek)

• British railway company Railtrack was advised to “reduce spending on infrastructure” — leading to a number of fatal accidents, and a subsequent collapse of Railtrack. (Property Week, the Independent)

Absolutely. Or as I like to put it, “information drives out analysis”. (You don’t need complex models to estimate something once it can be directly measured).

But information demands work, and money, and experimentation. In teaching statistics, the demands of the semester mean students get unrealistically clean data sets, and relatively seldom have to determine what to collect in the first place. When I refereed youth soccer, I used to think about what measures one would want to develop around that sport, and how much work it would take to determine what measures and then to code, say, thousands of games.